Question

State what each of the fifteen items you calculated in #2 measure. Your answer to each of these fifteen parts is one of the following: (a) average payoff; (b) risk; or (c) what a person would give up to get away from risk.

1) average

2) median

3) midrange

4) average – bank’s offer (Note: the – is a minus sign, not a dash in this assignment.)

5) range

6) variance

7) standard deviation

8) probability that your suitcase contains less than the bank’s offer

9) semivariance

10) semi-standard deviation

11) (average – bank’s offer) / average

12) bank’s offer – lowest

13) (bank’s offer – lowest) / range

14) (average – lowest) / range

16) [(bank’s offer – lowest) / range] / [(average – lowest) / range]

Also, Which measure(s) of risk do you think is(are) best measure risk as you perceive it? Why?

Answer 1

As per rules I am answering the first 4 sub parts of this question

1. Average: Average payoff

(The average payoff is computed using the mean)

2. Median: Risk

(Median is used to measure the risk of a security)

3. Midrange: Average payoff

(Midrange is another parameter used to measure the average payoff of a security. It represents the midpoint of the range of values)

4. Average- Banks offer: What person will givet o get away from risk

(The difference is the maximum that a person will give to cover his risk)